The Ninth
Circuit clarified the limited role courts play in reviewing labor arbitration
awards. (Southwest Regional Council of Carpenters v. Drywall Dynamics, Inc. (9th Cir., May 19, 2016, No. 14-55250)2016 WL 2909241.) The court held the district court exceeded its narrow
authority to determine whether an arbitrator’s award was based on the parties’
contract and whether it violated an “explicit, well-defined, and dominant
public policy.”
Drywall Dynamics (“Drywall”),
the employer, entered into a labor agreement with the Union, the Southwest
Regional Council of Carpenters. Under the agreement, Drywall assigned its
authority to bargain to a contractors’ association (“Association”). Years
later, Drywall attempted to terminate the agreement, only to discover the Union
and the Association had executed a Memorandum of Understanding (“MOU”)
extending the term of the agreement. An arbitrator held Drywall was bound by
the MOU. The district court, however, vacated the arbitration award, holding
the arbitrator’s interpretation of the parties’ agreement was not “plausible”
and “contrary to public policy.”
The Ninth Circuit reversed,
emphasizing that an arbitration award must be upheld as long as the arbitrator
even arguably construed or applied the contract. According to the court, the
appropriate and singular question to ask when determining whether to enforce an
arbitration award is: “Did the arbitrator look at and construe the contract, or
did he not?” The district court should not have considered whether the
arbitrator’s interpretation was “plausible.” Moreover, a court can only vacate
an arbitration award if it runs contrary to explicit, well-defined, and
dominate public policy.” The Ninth Circuit determined there were two “competing
interests” – the employer’s interest to withdraw from a multiemployer unit and
the interest in stable multiemployer units. Because there were competing
interests, neither could be “dominant” policy.
This decision reaffirms the
extremely deferential standard by which a court will review an arbitration
award.
